Key takeaways:
- With more than $100B in assets under custody, it appears that crypto exchange Binance has emerged relatively unscathed from a series of lawsuits against the exchange.
- The collateralization ratios for all of the major cryptocurrencies and altcoins are currently over 100%, according to Binance’s proof-of-reserves.
With more than $100 billion in assets under custody as of March 18, it appears that cryptocurrency exchange Binance has emerged relatively unscathed from a series of US Department of Justice (DoJ) lawsuits against the exchange and its co-founder Changpeng Zhao.
The announcement states that the assets held in custody by Binance users have more than doubled from $40 billion at the start of the year. They maintain additional reserves in addition to holding all user funds at a 1:1 ratio; Binance asserted that anyone could confirm this by utilizing the proof-of-reserves (POR) method. Binance went on to say:
“Recent weeks have witnessed a remarkable, sustained uptick in digital asset prices, a trend that has undoubtedly played a significant role in elevating the value of user assets under Binance’s custody.”
The collateralization ratios for all of the major cryptocurrencies and altcoins are currently over 100%, according to Binance’s proof-of-reserves.
However, experts have cautioned that proofs-of-reserves incorporate the liabilities of a business in order to determine its net equity, thus only providing half the necessary reserve information.
Binance CEO Richard Teng has since asserted that the capital structure of the exchange is “debt-free.” According to the conversation,
“Please note that the aggregate figures provided by blockchain market intelligence firms, while useful, are not a perfect representation of the amount of user funds on Binance: some of the assets included in such calculations are Binance’s own operational funds. The ultimate source of the most accurate information on user asset holdings on Binance are our monthly POR audits.”
Although Binance Labs, its venture capital division, has returned over 14 times on investments and now has a $10 billion portfolio, Binance stated on March 12 that it will be severing its relationship with the division. It said that while Binance has granted permission for Binance Labs to use its trademark, Binance Labs is not associated in any way with the Binance cryptocurrency exchange or any other related company.
